Households, deficits and belief

I know next to nothing about economics. I’ve read the odd bit of Marx and lots of modern blogs, which are surprisingly often about Mr Marx, but I didn’t study the subject and I haven’t read Piketty’s Capital in the Twenty-First Century.

I can however say with confidence that my “household budget” and the UK’s economy are entirely different things. I can’t print money, for one thing.

Of course, right leaning politicians like to make the connection between small, personal budgets and the economy because they can then say “just like you, we need to cut back and balance the books, and you can’t be paid much”. And because the English like a bit of belt-tightening rhetoric and need to think poor people are a bunch of wasters, everyone thinks it’s brilliant and your children’s centre closes. So it goes.

I still don’t understand where fuck off huge mortgages and tax cuts for really rich people fit into this. I guess economists can explain.

Chris Dillow and Richard Murphy have raised this point over the last week. Dillow, who often writes about the psychology of the economy, described comparisons between personal budgets and national economies as the economic illiteracy of the media and voters who have swallowed half–witted guff about balancing the nation’s books – but he fears Miliband might have come to actually believe the guff.

It’s the old New Labour approach of repeating the same message until everyone believes it. Including yourself.

Does the Labour Party rank and file believe it too? Frightening not only because it’s nonsense, but also, as Dillow argues, because it always ends in disappointment. After 13 years of a Labour government a coalition was able to dismantle pretty much the whole welfare state as we know it in a couple of years.

The Labour Party is largely pragmatic because it thinks the electorate in marginal seats is fundamentally conservative in its outlook. But none of the members I know joined the party to bang on about making cuts to public services. However, there are several MPs who seem to believe this austerity rhetoric, even the odd activist.

There’s something in Labour that says you have to believe in the argument behind a policy, even when it’s apostasy. One of the many advantages the Tory party holds over Labour is its understanding that it’s all tactics: Only the goal matters.